%  7.  ' 
J*  o.  i0 


\  V? 


V\  5"  ‘i 


i  * 


No.  17. 


PAPERS  FROM  THE  SOCIETY 


r  \  V 


FOB  TUB 


Diffusion  of  Political  Knowledge 

THE  HISTORY  OF  THE  WAR  DEBT  OF  ENGLAND; 

THE  HISTORY  OF  THE  WAR  DEBT  OF  THE  UNITED  STATES, 
AND  THE  TWO  COMPARED. 


BY  THOMAS  Pi  KETTELL, 

Financial  Editor  of  Hunt's  Merchants'  Magazine. 


READ— DISCUSS— DIFFUSE. 


President,  Prof.  S.  F.  B.  MORSE. 

OFFICE  OF  THE  SOCIETY,  No.  13  PARK  ROW,  NEW  YORK. 
0.  MASOF,  Cor.  Secretary, 

To  whom  oil  communications  maj  be  addressed. 


various 


cities, 


Resolved,  That  it  he  recommended  to  all  citizens  in  the 
counties,  and  villages  of  this  and  other  States,  who  approve  ^ 
expressed  in  this  Constitution,  that  they  organize  auxiliar  y  societies  ^ 
open  communication  with  the  New  York  Society,  for  the  pnrpose  0fV 
lating  our  papers.  cueti- 


2 


The  permanent  war  debt  of  England  is 
a  modern  experiment  in  social  philoso¬ 
phy*  and  has  a  well  known  history,  which 
our  people  may  now  review  with  advan¬ 
tage.  Temporary  war  debt,  to  be  paid 
out  of  the  taxes  of  the  passing  year  was 
common  to  the  ancients,  but  a  permanent 
war  debt  dates  back  only  to  Chariest  II. 
Indeed,  the  war  debt,  which  has  become 
a  permanent  burden  on  the  productive  la¬ 
bor  of  England,  was  not  acknowledged  as 
such  until  1829,  and  after  the  whole  debt 
had  been  incurred,  when  all  attempts  at 
diminishing  the  debt  were  abandoned  by 
Parliament,  leaving  the  interest  on  about 
four  thousand  millions  of  dollars  to  be  paid 
perpetually  by  the  labor  of  England  to 
the  children  of  those  people  who  lent  the 
money  to  the  Government  instead  of  pay¬ 
ing  it  in  taxes  to  support  the  war. 

The  beginning  of  the  debt  was  curious. 
Charles  had  borrowed  six  and  a  half 
millions  of  dollars  from  the  goldsmiths, 
(who  were  the  bankers  of  the  rich  people), 
and  given  them  an  order  on  the  exche¬ 
quer  for  the  return  of  the  loan  when  the 
taxes  of  the  year  should  be  collected. 
But,  when  the  time  came  for  payment, 
the  doors  of  the  exchequer  were  shut 
against  the  goldsmiths.  The  owners  of 
the  money  were  ruined.  London  was 
filled  with  dismay.  Bitter  and  loud  re¬ 
proaches  fell  on  the  king.  He  was  assail¬ 
ed  from  the  pulpits.  Sermons  were 
preached  from  the  text,  “  Put  not  your 
trust  in  princes.”  Indications  of  vio¬ 
lence  were  common  in  the  streets. 

To  quiet  this  clamor,  it  was  ar¬ 
ranged  that  annual  interest  should 
be  paid  out  of  the  revenues  of  each 
year  to  the  owners  of  this  money. 
Thus,  the  burden  of  the  passing  year  was 
thrown  on  the  earnings  of following  years. 
William  and  Mary,  finding  this  precedent, 
followed  it,  and  borrowed  on  terminable 
bonds,  resembling  our  “  five  twenties,” 
always  promising  and  endeavoring  to 
pay  after  the  war.  With  various  at¬ 
tempts  to  pi\y  in  time  of  peace,  but  stead¬ 
ily  increasing  the  debt  in  time  of  war, 
the  amount  hi\d  reached  six  hundred  and 
si'xty-five  millions  of  dollars,  in  1765. 

The  question  of  paying  this  debt  was 
anxiously  discussed  ;  projects  to  this  end 
were  presented  in  Parliament ;  but,  the 
discussion  was  turned  aside  by  the  in- 

.  \ 


troduction  of  a  new  financial  scheme 
which  turned  the  heads  of  men  in 
power,  and  carried  away  the  popu¬ 
lar  judgment.  The  fallacy  was  this  : 
It  was  asserted  that  a  small  sum 
of  money  kept  at  compound  interest,  in 
the  hands  of^commissioners,  would  ulti¬ 
mately  pay  the  largest  possible  amount 
of  public  debt.  The  Reverend  Dr.  Prjce, 
the  reputed  father  of  this  fallacy,  was  as 
sincerely  deluded  as  other  reformers 
have  been.  He  confidently  showed  that 
one  penny,  compounded  from  the  birth  ol 
Christ,  would  produce  globes  of  gold  at 
the  present  day.  The  government  be¬ 
lieved  it  had  found  the  lamp  of  Aladdin, 
and  applied  it  to  finance.  Accordingly 
the  sum  of  only  a  few  millions  of  dol¬ 
lars  was  borrowed  and  committed  to  a 
board  of  trusty  men  as  a  sinking  fund, 
which  was  sure  to  redeem.  England  out 
of  any  war  debt  which  might  be  incurred. 

From  that  time  the  English  people  cher¬ 
ished  the  war  temper  without  compunc¬ 
tion  or  restraint.  No  fear  of  pecuniary 
consequences  tempered  the  taste  for  war. 
The  poets  and  the  pulpits  called  for 
blood.  The  exchequer  called  for  loams, 
and  got  them,  while  it  was  thought  quite 
impertinent  to  tax  present  wealth  for  the 
payment  of  war  expenses,  which  the 
sinking  fund  was  sure  to  pay. 

Time,  and  two  wars  with  America  and 
perpetual  war  with  France,  brought  Eng¬ 
land  to  W aterloo,  and  to  four  thousand  mil¬ 
lions  of  war  debt.  Then  Professor  Hamil¬ 
ton  proved  to  the  satisfaction  of  all  that, 
the  sinking  fund  was  a  mere  fallacy,  and 
that  nothing  but  increased  taxes  or  di¬ 
minished  expenses  could  extinguish  one 
penny  of  the  debt.  The  history  of  the 
fallacy  is  remarkable.  At  first,  there' 
were  only  a  few  millions  set  apart  to  pay 
in  future  all  possible  war  debt.  As  the 
wars  went  on  and  the  debt  rolled  up,  Dr. 
Price  seems  to  have  had  some  misgiving 
of  this  theory,  and  strenuously  insisted 
on  borrowing  more  money  to  increase  the 
sinking  fund.  So  that,  when  the  fallacy 
was  exploded  and  the  fund  abolished,  it 
was  found  that  the  cost  of  making  these 
loans  and  managing  the  fund  had  wasted 
some  three  millions  of  dollars.  How  such 
a  gross  fallacy  should  have  deluded  a 
whole  nation  is  now  the  special  wonder 
of  English  statesmen.  But,  convenient 


t 


3 


> 


fallacies  are  always  popular  at  the  be¬ 
ginning  of  a  war. 

Faithful  to  the  old  idea  of  paying  a 
war  debt  in  time  of  peace,  the  Parlia¬ 
ment  resolved,  in  1819,  to  set  apart  twen¬ 
ty-five  millions  of  dollars  in  each  year 
for  this  purpose.  This  would  have  ex¬ 
tinguished  the  debt  in  160  years.  But 
the  pressure  was  too  great ;  and  after  a 
few  years,  the  resolve  to  pay  was  aban¬ 
doned,  and  never  renewed.  In  1829  the 
holders  of  these  five-twenties  were  invited 
to  bring  in  their  bonds  and  exchange 
them  for  permanent  bonds. 

No  one  now  can  doubt  that,  the  popu¬ 
lar  fallacy  of  the  sinking  fund  made  war 
the  popular  amusement  of  Englishmen 
during  forty  years.  This  amusement 
gave  offices  to  the  sons  of  unoccupied 
families  and  to  the  younger  sons  of  the 
nobility.  Of  course,  the  clergy,  depend¬ 
ent  on  these  families,  prayed  earnestly 
for  the  war.  Unlike  feudal  incomes, 
which  bound  only  the  products  of  a  sin¬ 
gle  tenant,  this  permanent  debt  bound 
the  whole  productive  labor  of  all  the  in¬ 
dustrial  classes,  and  bound  them  for  all 
time  ;  while  it  gave  to  the  unoccupied 
owners  of  the  bonds  a  complete  and  per- 
fpetual  security  for  a  fixed  income,  how¬ 
ever  it  might  become  harder  for  the  la¬ 
borers  to  earn  that  income.  Owners  of 
these  bonds  are  loud  in  their  praises  of  a 
-national  war  debt  ;  but  the  more  prudent 
of  them  would  dislike  to  see  the  debt  in¬ 
creased. 

But,  in  consequence  of  this  perpetual 
'burden  on  the  labor*  of  England  one- 
eighth  of  the  people  of  England  is  in  the 
poor  house,  and  a  large  part  of  another 
eighth  has  escaped  from  want  to  the  Col¬ 
onies. 

By  way  of  apology  for  William  and 
Mary,  it  is  said  that  it  was  vital  to  the 
people  of  England  that  a  Dutchman 
should  rule  instead  of  a  Scotchman.  So 
when  the  war  of  our  revolution  was  com¬ 
menced,  it  was  said  to  be  vital  to  the, 
people  of  England  that  an  English  gov¬ 
ernor  should  rule  here  rather  than  Wash¬ 
ington.  And  when  the  war  with  France 
was  begun  in  1193,  it  was  deemed  of  the 
greatest  importance  to  the  people  of  Eng¬ 
land  that  a  Bourbon  rather  than  a  Bona¬ 
parte  should  rule  France.  Washington 
did  rule  in -this  country,  and  a  Bonaparte 


does  rule  in  France.  Had  these  ques¬ 
tions  been  decided  the  other  way,  yould 
the  condition  of  any  laborer)  in  the  mines, 
the  factories  oif  the  fields  of  England 
have  been  better  than  it  now  is  ?  No  one 
thinlJs  it  would  have  been  better.  But,  had 
the  wars  with  America  and  France  been 
omitted,  the  laborers  would  have  been 
spared  the  burdens  of  permanent  debt. 

But,  could  these  wars  have  been  avoid¬ 
ed  ?  Let  us  see.  The  money  borrowed 
for  these  wars  was  already  laid  up  by  Eng¬ 
lishmen.  It  could  have  been  taken,  in 
the  form  of  tax,  and  applied  to  the  sup¬ 
port  of  the  wars,  instead  of  being  taken 
as  loans  on  exchequer  bonds  bearing  in¬ 
terest.  Now,  suppose  the  government 
had  called  together  tho  owners  of  this 
money  and  asked  them  the  question—- 
shall  these  wars  be  made,  and  your 
money  be  taken  to  foot  the  bills,  and  you 
go  to  work  again  to  lay  up  new  estates 
If  not  :  then  the  wars  ought  not  to  have 
been  commenced.  For,  will  any  one  pre¬ 
tend  that  the  classes  of  mere  labor  are 
to  be  benefitted  by  a  war,  which  kills  off 
the  able  bodied  of  their  members,  fills  the 
ranks  of  their  survivors  with  cripples, 
and  the  land  with  widows  and  or¬ 
phans  ;  and,  then,  when  a  new  race  of 
vigorous  laborers  has  been  produced, 
lays  on  these  a  perpetual  burden  which 
sends  one-eighth  of  their  whole  number 
to  the  poor  house.  In  the  long  peace, 
which  followed  Waterloo,  while  industri¬ 
al  art/ have  flourished  in  England  more 
than  in  any  other  country  or  age,  yet,  in 
consequence  of  the  war  debt,  Carlisle 
says  of  the  laboring  class,  “Two  millions 
are  out  of  the  boat,  and  five  millions 
are  hanging  over  the  side.” 

The  war  debt  of  England  was  one 
hundred  and  fifty  years  accumulating, 
and  was  incurred  under  false  expecta¬ 
tions  about  the  sinlcing  fund.  The  best 
statesmen  of  England  came  with  unaf¬ 
fected  sorrow,  to  the  conclusion  that  the 
debt  could  never  be  paid.  While  dwell¬ 
ing  sadly  on  this  subject,  after  Waterloo, 
the  greatest  of  English  statesman  said 
in  Parliament — “  War  is  a  game  at  which 
few  would  play  if  the  people  were  wise.” 
But,  had  he  made  this  remark  at  the 
opening  of  the  American  Revolution  or 
of  the  war  with  Napoleon,  he  would 
probably  have  been  charged  with  treason 


4 


Until  the  outbreak  of  the  present  war 
the  United  States  enjoyed  among  nations 
the  deserved  reputation  of  being  the  only 

fovemment  which  had  ever  paid  off  its 
ebt  in  full,  principal  and  interest,  unaid¬ 
ed  by  the  tax-gatherer.  The  freedom  of 
its  industrial  population  and  the  abund¬ 


ance  of  its  untaxed  lands  had  called  hither 
the  enterprising  of  all  nations,  and  it» 
wealth  and  population  grew  on  an  unpre¬ 
cedented  scale.  The  progress  of  tho 
whole  country  may  be  briefly  represent¬ 
ed  in  the  following  figures  from  official 


sources 


Decade*. 
1800. . . . 
1810. 
1820.*/, 
1830..., 
1840  .uv, 
1850.'...; 
1860.  k;.. 


Immigration. 


Population. 

6,303,937. 


Manufactures. 


7,239,814 .  $145,885,906 .  383,401,077. 


Exports.  Valuation. 

$293,634,645 .  $479,246,636- 


. .  9,638,191 .  62,766,385.....  462,701,288:....  613,180,107 

151,634 .  12,066,020.....  111,645,466  .  536,104,918 .  — — 

272,716 .  17,069,453 .  483,278,215.....  892,889,909..:..  - - 

1,479,478......  23,191,876,....  1,055,595,899 .  1,131,458,801 .  7,115,790,180. 

3,075,900 .  31,443,790 .  1,900,000,000 .  2,766,799,881.....  17,008,417,63^ 


The  column  of  immigration  gives  the 
whole  number  that  arrived  in  each  dec¬ 
ade;  and  most,  if  not  all  of  them,  settled 
at  the  North  and  West.  The  population 
column  is  composed  of  the  census  returns 
each  ten  years.  The  manufactures  are 
the  official  returns  of  the  annual  produc¬ 
tion  at  each  period.  The  exports  are  not 
the  annual  exports,  but  the  whole  quan¬ 
tity  exported  for  each  period  of  ten  years. 
The  valuations  &re  the  official  returns. 
The  first,  for  purposes  of  taxation,  was 
made  in  1798,  and  the  second,  for  the 
same  purpose,  in  1815.  Those  for  1850 
and  1860  are -the  census  returns.  This 
return  for  1860  indicates  a  very  large  in¬ 
crease  in  value,  but  it  can  not  all  be  taken 
as  an  accumulation  of  wealth,  since  a  very 
large  portion  consists  of  land  settled  at 
$1  a  $1  25  per  acre,  and  valued  subse¬ 
quently  at  much  higher  rates  according 
to  production.  The  large  production  in 
agriculture,  manufactures,  mining,  etc., 
is  always  nearly  all  consumed  in  the  year. 
That  portion  which  is  saved  and  invested 
in  buildings,  roads,  ships,  banks,  compa¬ 
nies,  accumulated  stocks  of  goods,  coin, 
etc.,  as  instruments  of  production  and 
trade,  bear  but  a  small  proportion  to  the 
whole  annual  production.  The  State’and 
Federal  expenses  have  been  very  small, 
comparatively,  and  the  Government  has 
not  extracted  much  from  the  producers 
to  support  large  armies,  civil  officers, 
government  stockholders,  and  other  non¬ 
producers,  as  has  been  the  case  in  other 
countries.  Nearly  the  whole  of  the  earn¬ 
ings  of  the  people  had  remained  for  their 
own  enjoyment,  and  to  accumulate  in  a 
manner  to  employ  more  extended  indus- 
irefore  to  swell  the  annual  pro¬ 


duction.  The  great  wealth  of  the  coun¬ 
try  has  thus  been  generally  distributed 
among  the  people.  It  has  long  been  a 
source  of  complaint  with  the  agricultural 
sections,  that  the  operation  of  the  cus¬ 
toms  revenue  has  been  to  draw  wealth, 
from  the  producers  of  the  national  ex¬ 
ports  and  put  it  into  the  pockets  of  the 
manufacturers.  When  the  protective 
system  was  inaugurated  at  the  peace  of 
1815,  it  was  earnestly  opposed  on  the 
ground  that  it  would  impoverish  the  ag 
ricultural  States  to  enrich  the  manufac¬ 
turing  States,  and  this  opposition,  gro  wing 
with  the  development  of  the  protective 
system,  led  to  the  Compromise  of  1831. 
That  compromise  was  to  operate  by  bien¬ 
nial  reduction  of  the  duties  to  1841,  when 
the  rate  was  to  be  20  per  cent.,  not  to  be 
exceeded  thereafter.  4-s  soon  as  that 
point  was  reached,  the  tariff  was  restored,, 
against  the  protest  of  Mr.  Calhoun,  who 
said :  “  I  shall  not  dwell  ‘on  the  fact  that 
it  openly  violates  the  compromise  act, 
and  the  pledges  given  by  its  author  and 
by  Governor  Davis,  of  Massachusetts, 
that  if  the  South  would,  adhere  to  the 
compromise  while  it  was  operating  fa¬ 
vorably  for  the  manufacturers,  they  would 
stand  by  it  when  it  came  to  operate  fa¬ 
vorably  for  the  South.  I  dwell  not  on 
those  double  breaches  of  plighted  faith, 
although  they  are  of  a  serious  character, 
and  likely  to  exercise  a  very  pernicious 
influence  over  our  future  legislation,  by 
preventing  amicable  adjustments  of  ques¬ 
tions  that  may  hereafter  threaten  the 
peace  of  the  country.” 

The  revenue  of  the  Federal  Govern¬ 
ment,  since  its  organization,  may  be  said 
to  have  been  derived  entirely  from  tho 


5 


•CTjatoms  duties.  These  have,  ordinarily, 
been  equal  to  the  expenditure.  In  the 
war  of  1812  an  attempt  was  made  to  eke 
out  tho  revenues  by  means  of  internal 
taxes,  with  no  great  success,  however. 
The  lands  have  given  a  certain  amount 
of  revenue,  hut  it  has  been  estimated  that 

Customs  revenue . 

Land  sales . . . . . 

Taxes  and  miscellaneous . 

Total  ordinary  revenue . 

Total  ordinary  expenditure . 


the  cost  and  expense  of  management  have 
never  been  reimbursed:  hence  that  the 
Government  proper  has  received  no  aid 
from  that  source.  The  whole  revenue 
and  expenditure  from  March  4,  1789,  to 
July  1,  1861,  have  been  as  follows: 

.  $1,575,152,679  92 

$175,817,961  00 

95,305,322  56  271,123,283  56 

#»  _ , _ w 

. .  $1,846,275,863  48 

.  1,453,790,786  00 


Total  excess  revenue .  $392,485,077  48 

Received  for  loans .  $462,935,644  64 

Paid  “  “  . . .  781,886,375  00 


Excess  paid . 

The  excess  of  loans  paid  includes  the 
Revolutionary  debt;  the  $60,00d,000 
principal  and  interest  paid  for  Louisiana 
and  Florida ;  also  the  sums  paid  Mexico 
and  Texas.  It  results  that  the  customs 
revenues  have  paid  the  whole  expense  of 
the  Government  proper.  When  financial 
revulsions  have  overtaken  the  country, 
causing  the  revenues  to  decline,  loans 
have  been  made  which  the  swelling  reve¬ 
nues  consequent  upon  returning  prosper¬ 
ity  have  discharged. 

Those  customs  revenues  have  been  de¬ 
rived  entirely  from  a  Jax  upon  imports, 
or  the  goods  that  have  come  back  into 
the  country  as  the  proceeds  of  produce 
cold.  Without  the  produce  it  is  very 
clear  there  could  have  been  no  imports, 
and,  as  a  consequence,  no  customs  duties. 
If  then  we  turn  to  the  Treasury  tables  to 
ascertain  the  extent  of  the  exports,  we 
fihall  have  results  a3  follows : 


.  $318,950,730  36 

Net  importations  of  goods,  1790 


to  1860 .  $7,104,890,932 

Domestic  produce  exported .  6,466,900,619 

Excess  imports .  $667,990,413 


This  excess  of  imports  consists  of  pro¬ 
ceeds  of  stocks,  State  and  corporate,  sold 
in  Europe,  earnings  of  American  vessels 
abroad,  and  other  items.  It  will  be  ob¬ 
served  that  the  whole  amount  received 
from  customs  is  22  per  cent,  of  the  whole 
amount  of  imports.  Those  imported 
goods  went  to  the  consumers  charged 
with  that  tax.  Inasmuch  as  they  were 
the  producers  of  the  merchandise  exported 
to  pay  for  the  goods,  the  whole  amount 
of  the  customs  was  in  fact  paid  by  them. 
If  now  we  look  into  the  character  of  the 
exports,  we  find  them  to  have  been  as 
follows  since  1820,  when  the  regular  offi 
cial  tables  commenced : 


Total  value  Domestic  Exports,  1820  to  1860 . 

Value  of  Cotton .  $2,574,834,491 

“  Tobacco.... .  455,181,067 

44  Rice . 87,854,511 

14  Naval  stores .  76,181,210 

44  Food,  etc .  1,006,951,225 

44  Cotton  and  other  manufaptures .  655,861,254 


Net  import  of  goods, 


$4,856,863,368 


4,856,863,368 

6,394,671,668 


Excess  imports 


$537,808,300 


This  excess  was  met,  as  previously  stated, 
by  an  excess  of  $347,419,646  in  the  ex¬ 
ports  of  specie  over  the  imports,  by  the 
exports  of  stocks,  earnings  of  shipping, 
etc.  Of  the  exports  of  food,  a  considera¬ 


ble  portion  was  of  Southern  origin,  and 
of  the  cotton  manufactures  exported,  two 
thirds  of  the  value  is  due  to  the  raw  ma¬ 
terial.  It  results,  then,  that  the  origin 
of  the  exports  has  been  as  follows  : 


Southern  States .  74  per  cent .  ...  $3,581,291,381 

Northern  States. .  26  per  cent . . * . .  1,275,571,957 


6 


Thus  the  productions  of  the  Southern 
States,  although  interchanged  for  North¬ 
ern  productions,  has  paid  a  large  portion. 

Net  imports  of  goods . 

Net  customs  duties .  22.8  per  cent. 

Net  customs  paid  by  Southern  products. . . 
“  “  Northern  44  .... 


The  net  imports  and  customs  duties  from* 
1820  to  1860  were  as  follows : 


.  $5,394,671,668 

.  1,231,456,168 

$911,277,665 

320,178,603 

-  $1,231,456,168 


Thus  the  average  expenditure  of  the 
Federal  Government  during  the  forty 
years  embraced  in  this  last  table,  has  been 
$30,780,000,  of  which  only  $7,800,000.  has 
been  supplied  by  Northern  productions. 

Under  this  system  of  small  Govern¬ 
ment  expenses  and  absence  of  internal 
taxes,  the  whole  country  flourished  even 
although  the  accumulation  of  wealth  in 
the  manufacturing  States  was  much  more 
rapid  than  in  the  agricultural  States.  A 
great  and  disastrous  change  has  taken 
place,  however,  with  the  outbreak  of  the 
present  war.  From  a  fertile  country, 


filled  with  peaceful  arts,  an  industrial' 
population  of  saving  habits  and  economi¬ 
cal  administration  gf  public  affairs,  we 
became  an  immense  battle-field,  supplied 
with  a  hand  so  lavish  that  four  years  of 
strife  have  swallowed  up  the  wealth 
earned  in  the  peaceful  pursuits  of  the  na¬ 
tion’s  lifetime. 

The  official  statement  of  expenditures 
for  1862  and  1863,  and  estimates  for  half 
1864  and  all  1865,  are  as  follows,  from  the 
report  of  the  Secretary  of  the  Treasury  to 
Congress,  1863 : 


Years. 

Customs. 

Lands. 

Taxes. 

Loans. 

Expenses. 

Debt  at  close. 

1862. . 

$49,056,397 

69,059,642 

72,562,018 

70,000,000 

$152,204 

167,617 

436,182 

1,000,000 

$1,795,332 

39,125,892 

77,599,714 

125,000,000 

$529,692,460 

690,266,682 

593,999,999 

644,978,549 

$474,744,778 

714,709,995 

750,815,089 

751,815,088 

$517,372,803 

1,098,793,181 

1,686,956,541 

2,231,935,130 

1863 . 

1864 . 

1865 . 

Total,  four  vears 

$260,678,057 

$1,756,003 

$243,620,938 

$2,258,937,690 

$2,692,084,949 

If  we  allow  these  estimates  to  be  correct,  |  the  four  years  compare  with  the  previous 
and  that  they  will  not  be  exceeded,  then  I  seventy-two  years  as  follows : 


Government  expenses,  72  years,  1789  to  1861 
«  “  4  “  1862  to  1865 


$1,453,790,786 

2,692,084,949 


Excess  in  four  years . x . 

Nearly  double  the  amount  is  expended 
for  the  four  years  that  the  previous  sev¬ 
enty-two  years,  embracing  two  foreign 

Expenses . 

Customs  and  Lands . 

,  Taxes . 

I  Loans . 


.  $1,238,294,163 

wars,  required.  This  enormous  amount 
is  derived  aS\  follows  : 


.  $2,692,084,949 

$262,434,060 

243,620,938 

2,258,937,690 


Total  receipts . 

The  expenses  of  the  four  years  have  been 
derived,  one  fifth  from  taxes  and  four 
fifths  from  loans.  This  is  assuming,  how¬ 
ever,  that  the  estimates  of  the  Secretary 
will  prove  correct.  If,  however,  we  judge 


.  $2,763,992,688 

from  the  past,  there  is  little  hope  of  this* 
Thus  his  tax  estimates  for  1863,  compared 
with  what  was  actually  realized,  were  aa 
follows : 


Direct  tax . 

Internal  revenue 


Estimate. 
$11,620,717  99 
85,456,303  73, 


Realized. 
$1,485,103  61 
37,640,787  95 


Deficit. 

$10,135,614  38 
47,815,615  78 


« 


Total 


$97,077,021  72 


$39,125,891  56, 


$57,951,130  16 


7 


I 


This  deficit  took  place  ^during  a  period 
of  great  abundance  of  money  and  business 
activity.  Yet,  the  Secretary  estimates 
that  ihe  same  tax  will  give  $125,000,000 
in  the  fourth  year  of  war,  after  continued 
exhaustion.  He  estimates,  also,  that  the 
customs  revenue  will  yield  more  in  a  year 
when  the  exports  are  cut  off  by  compara¬ 
tively  short  harvests  at  home  and  good 
harvests  abroad,  than  they  did  in  the  year 
of  the  largest  exports  of  breadstuffs  ever 

Report  1861,  page  22,  estimate  of  expense  for  1863 
*‘  1863,  “  28,  actual  “  “  1863, 


known.  Nevertheless  we  accept  his  esti¬ 
mates,  and  we  find  that  July  1,  1865,  will 
see  the  country  with  a  debt  of  $2,231,- 
93^130,  providing  no  more  money  is  ap¬ 
propriated  than  now  asked  for,  and  that 
$400,000,000  of  the  appropriations  asked 
for  are  not  expended.  How  far  these  fu¬ 
ture  estimates  are  to  be  trusted  may  be 
gathered  from  the  same  estimates  for 
1863,  compared  with  the  fact:  • 

Expense.  Debt 

.  $475,331,245 .  $897,372,802 

.  714,709,995 .  1,098,793,181 


Excess  over  estimate, 


$239,378,750. .......  $201,420,379 


This  error  in  the  expenses  was  more  than 
50  per  cent. ;  consequently  the  debt,  in¬ 
stead  of  being  $897,372,802,  as  estimated, 
was  1,098,793,181,  July  1,  1863,  with  a 
large  amount  of  claims  unpaid.  There 
are  already  before  Congress  large  amounts 
of  claims  for  damages  by  inroads  and  de¬ 
vastation,  also  large  sums  for  bounties, 
which  will  swell  the  appropriation,  and 
if  all  are  called  for  the  debt  can  not 
be  placed  below  $3,000,000,000  July 
1,  1865.  The  debt  of  the  Confederate 


States,  according  to  estimates  based  on 
the  recent  report  of  Mr.  Memminger,  will 
at  the  same  time  be  $2,500,000,000,  which 
represents  the  sum  that  the  Confederate 
Government  owe  for  labor,  materials,  mu¬ 
nitions,  and  other  capital  consumed  dur¬ 
ing  the  war. 

If  now  we  turn  to  official  sources,  and 
take  the  population,  census  valuation  of 
existing  property,  State  debt,  and  pro¬ 
portion  of  public  debt  for  each  State,  we 
have  results  as  follows : 


Population,  Census  Valuation,  Slate  Debts,  and  Proportion  of  Federal  Debt  to  each  Stale. 


, - Valuation. - ,  Proportion  of 

States.  Population.  Keal  Estate.  Personal.  State  Debt.  Federal  Debt.  Total. 

California .  818,116...  $66,906,631...  $72,748,036.. .  ' $4,271,714. ...  $5S,533,740. ..  $62,805,4# 

Connecticut .  460,151...  191,478,842...  149,778,131...  1,037,000...  69,348,150...  70,385,1# 

Illinois .  1,711,753...  287,219,940...  101,987,433...  12,337,881...  258,010,200...  270,847,581 

'  Indiana .  1,350,941...  201,829,992...  119,212,432...  8,755,453...  203,596,870...  212,352,321 

Iowa .  674,948...  149,433,428...  55,733,560...  1,122,295...  101,719,800...  102,842,09? 

Kansas .  107,110...  16,088,602...  6,429,630...  ...  16,164,670...  16,154,67 

Maine .  628,276...  86,717,716...  67,662,672...  1,499,000...  94,687,250...  96,186,2# 

Massachusetts .  1,231,065...  475,413.165...  801,744,651...  10,988,919...  185,530,720...  196,519,639 

Michigan .  749,112...  128,605,084...  89,927,921...  2,649,335...  112,896,670...  115,546,005 

Minnesota .  162,022...  25,391,771...  6,727,002...  316,682...  24,417,900...  24,734,582 

New  Hampshire .  876,022...  59,638,846...  64,171,743...  ...  49,141,350...  49,141,350 

New  Jersey .  672,031...  151,161,942...  145,520,550...  581,820...  101,268,900...  101,800,720 

New  York .  8,887,542...  1,069,658,080...  820,806,558...  80,487,264...  585,882,600...  616,369,864 

Ohio .  2,339,599...  687,518,121...  272,34S,980...  17,656,223...  853,417,800...  871,074,023 

Oregon .  52,464...  6,279,602...  12,745,813...  ...  7,906,500...  7,906,500 

Pennsylvania .  2,906,370...  561,192,980...  158,060,355...  40,448,961...  488,036,900...  478,485,861 

Rhode  Island .  174,621...  83,778,204...  41,326,101...  1,200.000...  81,392,600...  82,592,600 

Vermont .  815,116...  65,639,973...  19,118,646...  984;000...  47,490,800...  48,474.300 

Wisconsin .  775,873...  148,238,766...  87,706,723...  1,200,000...  117,087,600...  118,137,600 


Total .  18,898,102...  $9,674,937,031...  $1,955,820,248...  $185,486,047...  $2,858,470,520...  $2,993,956,567 


This  debt  exceeds  by  $1,000,000,000 
the  whole  personal  estate — the  accumu¬ 
lation  of  eighty  years. 

In  addition  to  the  Northern  debts  are 
those  of  towns,  counties,  and  cities,  which 
will  swell  the  aggregate  by  100  millions. 
Thus  the  liability  of  New  York  State  is 
$616,369,864;  of  this  $154,092,466  falls 
upon  the  city  of  New  York,  and  must  be 
increased  by  the  city  debt  $20,000,000, 
making  $174,092,466;  $1,070  for  each 


family  of  five  persons,  and  equal  to  the 
whole  personal  property  assessed  in 
1861. 

The  following  table  gives  the  same 
features  for  the  Southern  States.  The 
personal  valuation  in  the  third  column 
embraces  the  slave  property  at  a  valua¬ 
tion  of  three  hundred  dollars  each  (which 
corresponds  with  the  price  at  which  the 
white  men  are  estimated  at  the  War 
Department).  The  aggregate  of  this 


8 


property  is  nearly  $1,200,000,000,  and 
there  remains  $1,977,814,611  as  the  value 
of  all  other  personal  property  at  the 
South.  This  has  been  largely  reduced 
through  consumption,  non-production, 
and  the  devastations  of  war.  The  pro¬ 


ductive  power  of  the  land  has  also  been 
reduced  by  the  destruction  of  the  facili¬ 
ties  for  production,  which  must  be  re¬ 
placed  from  new  earnings  on  the  return 
of  peace. 


t  - . -Val  nation.  ■  ■  — > 

8tates.  Population.  Beal  Estate.  Personal.  State  Debt.  Public  Debt.  Total. 

Alabama . .  964,296...  $155,034,089...  $277,164,673...  $5,098,000...  $156,993,900...  $162,991,900 

Arkansas .  485,427...  68,254,740...  116,956,590...  8,092,622...  78,565,800...  81,658,422 

Delaware. .  112,218...  26,273,803...  18,403,439...  ...  22,408,800...  22,408,300 

Florida.... .  140,489...  21,722,810...  47,206,S75. ..  158,000...  23,256,600...  28,414,600 

Georgia .  1,057,329...  179,801,441...  488,430,946...  8,170,750...  175,310,100...  178,4SO,850 

Kentucky .  1,155,713...  277,925,054...  250,287,639...  5,574,244...  214,10S,500. ..  26,6S2,744 

Louisiana .  706,290.../  280,704,988...  155,082,277...  10,023,903...  115,765,800...  125,789,708 

Maryland .  687,034...  65,441,538...  231,793,800...  14,854,204...  131,046,900...  145,901,104 

Mississippi .  791,896...  157,836,737...  851,636,175...  7,271,707...  128,925,200...  181,196,907 

Missouri .  1,182,817...  153,450,577...  113,485,274...  19,038,000...  228,838,100...  247,376,100 

North  Carolina .  992,667...  116,366,573...  175,931,029...  18,978,505...  112,857,000...  126,835,505 

South  Carolina .  703,812...  129,772,684...  859,546,444...  6,192,743...  109,071,000...  .115,263,748 

Tennessee .  1,109,847...  210,991,180...  162.504,020...  16,643,607...  200.849,400...  217,493,007 

Texas . *  602,432...  112,476,013...  155,316,322...  -  ...  106,531,800...  106,531,800 

Virginia . .  1,596,079...  417,952,228...  239,069,108...  83,005,159...  281,265,000...  61,265,159 


Total  Southern .  12,247,276...  $2,369,008,451...  $3,177,814,611...  $188,101,444...  $2,080,293,400...  $2,218,394,844 

Total  Northern .  18,898,102...  9,674,987,031...  1,955,820,248...  135,486,047...  2,858,470,520...  2,993,956,567 


Total. .  81,145,378.. 


$12,043,945,482. 


.  $5,133,684,859... 


$273,5S7,491 . . .  $4,938,763,920...  $5,212,851,411 


This  enormous  debt  is  to  be  provided 
for.  The  borrowing  must  cease.  The 
public  expenditure  be  reduced,  and  the 
interest  and  expenses  gathered  from  the 
diminished  capital  and  industry  of  the 
country.  The  extent  of  the  annual  de¬ 


mand  after  1865  may  he  estimated,  under 
the  supposition  that  peace  will  then  have 
been  restored.  We  may  compare  the 
ordinary  expenses  of  the  Government 
under  this  state  of  affairs  with  what  they 
were  before  the  war,  as  follows : 


UNITED  STATES  EXPENDITURE. 


* 

1860. 

1863. 

1866. 

Peace  Estimate. 

Civil  list . 

.  $6,148,655.... 

$6,350,618 

18. 

. . .  $8,600,000 

Foreign  intercourse . 

.  1,163,207.... 

1,231,413 

06. 

2,400,000 

Interior — pensions,  Indians,  etc . .  . . . . 

.  3,955,687.... 

4,216,520 

79. 

. . .  20,000,000 

War  department . . . 

.  16,409,767.... 

699,298,600 

83. 

. . .  120,000,000 

Navy  “  . 

.  11,513,150.... 

63,211,105 

27. 

. . .  25,000,000 

Miscellaneous — lighthouses,  building,  etc . 

.  20,658,008.... 

15,671,890 

24. 

...  20,000,000 

Total . 

.  $69,848,474.... 

$689,980,148 

97. 

...  $195,900,000 

Interest  public  debt . 

.  2,638,464.... 

24,729,846 

61. 

...  171,480,000 

Total . . 

.  $72,486,938.... 

$714,709,995 

68. 

...  $367,380,000 

Customs  revenue . . . 

.  63,187,511.... 

69,059,642 

00. 

. . .  70,000,000 

The  fhture  expenditures  of  the  Govern¬ 
ment  can  no  longer  be  measured  by  the 
past.  The  incidents  of  the  war  will,  in 
any  event,  involve  a  very  large  increase 
in  expenses.  Thus  the  pension  list  was 
$1,000,000,  including  some  Revolutionary 
claims  of  eighty  years’  standing.  1,500,000 
men  have  been  now  called  to  arms,  and 
the  pensions  that  will  accrue  to  them  can 

Officers . . 

^Non-commissioned  and  privates . . 


not  be  measured.  They  are  already 
$7,000,000.  The  bounties  sweep  away 
all  future  revenue  from  land.  The  tax 
gatherers,  assessors,  etc.,  will  henceforth 
be  a  formidable  expense.  The  army, 
which  was  before  never  over  12,000  men 
on  the  peace  footing,  will  henceforth  be 
fully  100,000.  The  numbers  of  the  troops 
are  computed  thus : 

I860.  1863.  1866. 

.  1,083 .  160,000 .  11,000 

.  11,488  .  800,000 .  100,000 


Total 


12,471 .  960,000 .  110,000 


If  12,471  men  in  1860  cost  $16,409,767,  I  $120,000,000.  The  expenditure  per  man 
the  future  cost  can  not  be  less  than  |  will  be  more  in  1866  than  in  I860,  be- 


•cause  there  will  be  required  more  trans¬ 
portation.  We  have  reduced  the  figures 
ifrora  the  official  estimate. 

The  number  of  vessels  in  the  navy  is 


as  follows: 

1860. 

1868. 

1866. 

Ships,  sailing . 

.  44.... 

112. 

...  112 

Steamers,  screw . 

.  29.... 

198. 

...  230 

“  side-wheel. 

203. 

...  300 

u  iron-clad.. 

. — .... 

75. 

...  150 

.  . 

—  — 

- — 

Total . 

.  80.... 

688. 

...  792 

If  eighty  vessels  partly  in  commission 
in  1860  required  an  expenditure  of 
$11,513,150,  seven  hundred  and  ninety- 
two  vessels  in  1866  require  at  least  four 
times  as  much.  We  have  estimated  little 
more  than  double.  The  light-houses, 
public  buildings,  railroads,  and  the  whole 
long  list  of  items  which  make  up  the 
miscellaneous  expenditure,  will  require  a 
larger  amount  than  formerly. 

It  follows  from  all  these  considerations 
that  the  whole  expenditure,  including 
interest,  will  not  be  less  than  $367,000,000 
per  annum.  W  e  are  now  to  consider 
'  what  proportion  that  amount  bears  to  the 
surplus  production  of  the  whole  country. 
The  amount  of  taxes  which  can  be  paid 
-each  year  to  the  support  of  the  Govern¬ 
ment  can  not  exceed  a  portion  of  the 
surplus  earnings  of  the  people  each  year, 
or  that  portion  which  each  man  can  spare 
out  of  the  operations  of  his  business. 
The  capital  produced  in  a  year  is  nearly 
all  expended  in  the  same  time.  In  some 
years,  as  those  of  short  crops,  probably 
there  is  some  diminution  of  capital,  which 
is  felt  in  the  increased  privations  of  a 
portion  of  the  people.  It  is  possible  that 
one  year  with  another  ten  per  cent,  of 
the  product  of  labor  may  be  saved.  Of 
this  a  portion  is  applied  to  the  extension 
of  business,  improving  land,  constructing 
bouses,  etc.,  and  a  portion  invested  in 
public  stocks.  These  investments  have 
of  late  years  taken  the  shape  of  State, 
city,  and  county  stocks,  railroad  capital 
bonds,  bank  capital,  savings  bank  depos¬ 
its,  bonds  and  mortgages,  stocks  of  mer¬ 
chandise,  etc.,  and  in  the  extension  of 
capital  applied  to  the  employment  of  in¬ 
dustry.  All  these  applications  of  capital 
become  taxable.  The  exact  amount  of 
them  it  is  difficult  to  determine,  but  the 
rate  of  progression  may  be  indicated  in 
£he  returns  of  assessed  values.  The  accu¬ 


mulated  capital  of  the  country  was  given 
in  the  census  at  its  “  true  value.”  This 
amount  was  $17,008,417,635  real  and 
personal  estate.  The  value  estimated  at 
the  formation  of  the  Government  was 
$600,000,000,  consequently  $16,400,000,- 
000  would  be  the  accumulation  for  sev¬ 
enty  years,  which  would  be  an  average 
of  $234,000,000  per  annum  during  the 
whole  period,  or  about  two  thirds  the 
amount  required  now  for  the  Government. 
That  amount,  however,  includes  a  valua¬ 
tion  of  land  which  has  not  accumulated, 
but  has  received  value  which  depends 
upon  its  annual  products.  The  personal 
property  of  the  country  is  $5,081,661,050, 
accumulated  in  seventy  years.  But  it 
has  only  been  within  the  last  twenty 
years  that  property  has  very  rapidly 
accumulated.  The  census  returns  for 
1850  and  1860  give  the  figures  as  follows : 

1850— Keal  and  personal  estate.. .  $7,115,790,180 
1860 .  17,008,417,635 

Increase . $9,892,627,465 

This  accumulation  is  for  the  whole 
Union  during  a  decade  of  great  prosper¬ 
ity,  caused  by  the  gold  discoveries  of 
California,  the  extension  of  railways,  the 
great  immigration,  and  the  rapid  settle¬ 
ment  of  lands. 

An  important  element  in  the  accumu¬ 
lation  of  property  has  been  the  fact  that 
the  Government  has  expended  so  little 
of  the  annual  production  upon  military 
and  other  unproductive  establishments. 
The  wealth  has  been  saved  and  reapplied 
by  the  people  in  a  productive  manner. 
It  is  a  common  fallacy  to  suppose  that  if 
the  Government  expenditures  are  made 
“  among  ourselves,”  that  therefore  there 
is  no  loss.  This  is  a  great  error — con¬ 
sumption  by  non-producers  burdens  the 
industrious  in  proportion  to  the  extent 
of  the  consumption.  If  the  Government 
employs  1,000,000  men  destroying  lives 
and  property,  till  that  those  men  consume 
must  be  produced  by  others.  In  their 
ordinary  pursuits  they  would  themselves 
produce  more  than  they  consume.  The 
Government  has  hitherto  employed  very 
few  people,  and  for  revenue,  its  sole 
dependence  has  been  the  customs  duties. 
These  have  been  levied,  as  a  general 
thing,  at  the  highest  point  of  revenue. 
That  is,  at  such  a  point  as  would  give  the 


10 


highest  incidental  protection,  without  be¬ 
coming  prohibitive,  and  the  amount  of 
revenue  has  increased  with  the  sum  of 
the  exports.  This  is  illustrated  in  the 


following  table,  showing  the  leading  and 
aggregate  exports,  and  the  duties  at 
several  periods : 


Tears.  Cotton.  Tobacco.  Rico.  Flour  &  Prop's.  Mannfactnres.  8peel«.  Total.  Duties.  p.  a 

1790 .  $42,285..  $4,349,567..  $1,753,796..  $5,991,171..  ...  -  ..  $19,666,101..  $3,443/170..  IS 

1807 .  14,232,000..  6,209,000..  2,307,000..  15,706,000..  $2,309,000..  -  ...  48,699,592. .  15,845,521.  8S 

1816 .  24,106,000..  12,870,000..  2,378,880..  20,587,376..  2,331,000..  -  ..  04,781,896..  86,806,S74.  65- 

1821 .  20,157,484..  5,649,000..  1,494,387..  12,341,360..  2,752,631..  -  ..  43,671,894..  18,004,447..  80 

1831 .  31,724,682..  4,892,388..  2,016,267..  12,424,701..  6,086,890..  $2,058,474..  61,277,057..  24,224,441..  41 

1836  .  71,284,925..  10,058,640..  2,548,750..  9,588,359..  6,107,528..  345,783..  106,916,680..  23,409,940..  2? 

1842 .  47.593,464..  9,540,755..  1,907,387..  16,902,876..  7,102,101..  1,171,754..  92,969,996..  18,187,908..  20 

1847 .  53,415,848..  7,242,086..  8,605,896..  68,701,921..  10,351,364..  62,620..  150,637,464..  81,757,070..  20 

1851 .  112,315,317..  9,219,251..  2,170,997..  21,943,651..  20,186,967..  18,069,580..  196,6S9,718. .  49,017,567. .  26 

1856 .  128,382,351..  12,221,843..  2,390,233..  77,1S7,220..  80,970,280..  44,148,279..  810,5S6,330. .  64.022,863..  21 

1859  .  161,434,923..  21,074,038..  2,207,148..  87,987,395..  82,471,927..  57,502,305..  835,894,3S5. .  49,565,S24..  10 

1860  .  191,S06,555. .  15,906,547..  2,567,339..  45,216,155..  86,529,982..  56,946,851..  873,189,274..  58,187,511..  — 

1861  .  84,051 ,4S3. .  18,7S4,710..  1,382,178..  96,844,921..  38,695,266..  23,799,S70..  228,699,486..  89,532,125..  IT 

1862  .  1,180,118..  12,325,356..  156,899..  119,338,785..  26,240,101..  81,044,651..  212,920,639..  49,056,397..  2& 

1863  .  .  ..  -  ..  -  ..  -  ..  -  ..  55,993,562..  234,460,352..  69,059,642..  80 


The  rate  of  duties  charged  has  changed 
from  time  time.  Thus  in  1 807  the  average 
was  thirty  per  cent.  During  the  war  of 
1812  the  duties  were  all  doubled,  and  when 
peace  returned,  allowing  the  accumulated 
cotton  and  tobacco  to  go  forward  in  large 
quantities  to  pay  for  the  flood  of  goods 
that  poured  into  the  country,  the  revenue 
was  very  large,  at  an  average  of  fifty-five 
per  cent.  The  rates  were  restored  to  the 
peace  standard,  but  under  the  protective 
system  were  again  pushed  up  to  an  aver¬ 
age  of  forty-one  per  cent,  in  1831,  to  be 
again  reduced  under  the  compromise 
tariff  to  twenty  per  cent,  in  1841. 

In  1851  a  new  element  began  to  enter 
into  the  exports  in  the  gold.of  California. 
Previously  the  increase  of  the  customs 
had  depended  upon  the  growth  of  cotton, 


which,  with  tobacco  and  rice,  formed  the 
main  basis  of  the  customs  revenue.  The 
repeal,  in  1842,  of  the  British  prohibitive 
duties  on  the  import  of  provisions,  gave 
an  impulse  to  that  trade,  which  has  in* 
creased  spasmodically  with  the  state  of  the 
harvests  abroad.  The  value  exported  m 
1862  was  very  large,  and  went  far  to 
compensate,  in  that  year,  for  the  great 
decline  in  the  value  of  cotton,  tobacco, 
and  rice.  The  export  of  manufactures  is 
reduced  by  the  same  cause.  Thus  the 
manufactures  of  1860  embraced  $10,934- 
796  of  cotton  goods,  $3,382,428  of  manu¬ 
factured  tobacco,  $1,916,787  spirits  of 
turpentine — together,  $16,235,011.  The 
exports  divide  themselves  for  the  two 
last  years,  officially  reported,  as  follows  t 


I860.  1861. 

Southern  products .  $229,031,026 . •: . . .  $65,743,301 

Northern  “  .  87,211,397 .  138,422,998 

Gold....* .  56,946,851 .  23,799,870 


t 


Total . 

It  is  apparent  from  these  figures  that 
without  the  restoration  of  those  Southern 
products  that  have  furnished  so  large  a 
portion  of  the  exports,  that  the  customs 
revenues  can  not  be  depended  upon  for 
any  great  increase  of  revenue.  The  lands 
will  be  entirely  absorbed  in  military 
bounties. 

There  will  then  remain  only  the  taxes, 
which  are  of  two  forms :  1st,  direct  tax 
npon  property  which  the  Constitution 
prescribes  shall  be  laid  “  only  in  propor¬ 
tion  to  representative  numbers 2d,  im¬ 
posts  and  excises,  which  shall  be  “uni¬ 
form  throughout  the  United  States.” 
This  embraces  the  tax  upon  incomes. 


$373,189,274 .  $227,966,169. 

The  Constitution  also  prescribes  u  no  tax 
or  duty  shall  be  laid  on  articles  exported 
from  any  State.”  This  does  not  state 
“  export  duty,”  but  duty  on  “  articles  ex¬ 
ported.”  Thus  flour  and  wheat  are  arti¬ 
cles  exported,  and  may  therefore  not  be 
taxed.  The  same  rule,  if  insisted  on,  may 
exempt  almost  all  productions. 

It  is  evident,  therefore,  that  even  if  the 
Union  were  restored  with  all  its  produc¬ 
tive  power  unimpaired  and  its  commerce 
in  full  vigor,  the  customs  would  not  give,, 
in  the  best  times,  one  fifth  the  required 
sum  ;  but  with  the  upsetting  of  the  South¬ 
ern  system  of  labor,  the  whole  of  that  vast 
production  will  cease,  and  no  longer  con- 


11 


I 


tribute  to  the  wealth  of  the  country.  If  the 
customs  are  included  in  the  indirect  taxes, 
and  the  amount  of  all  reaches  the  esti¬ 
mates  of  the  Secretary,  there  will  remain 
to  be  collected  from  direct  tax,  or  imposts 
on  lands,  nearly  two  hundred  millions  per 
annum.  If  then  we  apportion  the  direct 
tax  among  the  States  according  to  repre¬ 
sentative  numbers,  as  prescribed  by  the 


Constitution,  and  the  indirect  taxes  ac¬ 
cording  to  the  probable  consumption  of 
the  commodities  taxed,  we  shall  have  the 
amount  to  be  paid  by  each  State,  in  addi¬ 
tion  to  the  existing  State  expenses.  The 
sum  of  all  may  be  compared,  with  the 
annual  earnings  of  each  State,  as  in  the 
following  table : 


State  Valuation,  Slate  Expenses,  Apportionment  of  Federal  Taxes,  and  State  Earnings. 


States. 

State 

Valuation. 

State 

Expenses. 

Direct  Tax. 

Indirect  Tax. 

Total. 

State 

Earnings. 

California . 

Connecticut . 

Illinois . 

Indiana . 

Iowa . 

Kansas . 

Maine . 

Massachusetts. . . . 

Michigan . 

Minnesota . 

New-  Hampshire . . 

New  Jersey . 

New  York . 

Ohio . 

Oregon . 

Pennsylvania . 

Rhode  Island.... 

Vermont . 

Wisconsin . 

y 

Total. . . 

$147,811,617 

224.758.619 
407,477,367 
455,011,378 
146,287,025 

22,518,232 

164,714,168 

861,547,583 

138,553,848 

39.077,532 

156,310,800 

296,6^2,442 

1,441,767,430 

892,570,438 

21,288,931 

568,770,234 

125,104,305 

84.758.619 
180,984,354 

$1,462,691 

224,101 

393,000 

985,728 

288,351 

20;000 

358,527 

1,163,742 

718,806 

106,462 

172,685 

257,432 

5,106,083 

3,552,995 

55,831 

3,879,054 

207,484 

224.101 

832.101 

$2,723,070 
4,623,210 
17,198,265 
'  13,573,125 

6.781.320 
1,076,145 
6,312,390 

12,368,715 

7.526.445 
1,627,860 
3,276,090 
6,752,010 

39,059,770 

23,506,335 

52,710 

29,200,785 

1.754.445 
3,166,020 

7.795.320 

$2,633,148 

3,698,568 

13,758,612 

10,859,100 

6,425,056 

860,916 

5,049,912 

9,894,972 

6,021,156 

1,302,288 

2,620,872 

5,401,608 

32,547,816 

18,805,068 

42,168 

23,360,728 

1,433,556 

2,532,816 

6,236,256 

$6,818,909 

8,545,879 

31,349,877 

25,417,953 

12,494,727 

1,937,061 

11,720,829 

23,327,429 

14,268,407 

2,036,610 

6,069,647 

12,411,050 

76,713,669 

45,864,398 

150,709 

56,440,567 

3,391,485 

6,922,937 

14,863,677 

$12,568,741 

10,566,994 

29,269,472. 

30,214,097 

11,221,101 

2,500,000- 

6,794,300 

31,554,452 

10,767,662 

3,000,000 

6,413,284 

10,668,200 

72,639,840' 

45,869,780 

1,622,545 

57,281,101 

4,734,543 

1,308,668 

15,426,882 

$6,374,914,922 

$20,009,184 

$188,374,030 

$152,884,616 

$361,267,830 

$364,431,862; 

The  State  earnings  are  ascertained  by 
taking  the  State  valuation  on  which  taxes 
were  paid  in  1850  and  I860,  and  the  dif¬ 
ference  is  assumed  to  be  the  accumulated 
capital  in  ten  years,  one  tenth  of  that  is 
the  earnings  per  annum.  The  State  valu¬ 
ation  may  not  be  the  true  value,  but  the 
valuation  at  each  period  will  bear  the 
same  proportion  to  the  actual ;  hence  the 
difference  will  approximate  to  the  true 
increase. 

This  result  shows  that  the  Government 
will  absorb  the  whole,  of  the  annual  sur¬ 
plus  earned  on  the  vast  scale  of  prosper¬ 
ity  which  existed  before  the  war.  That 
measure  of  prosperity  will,  however,  not 
again  exist.  The  whole  productive  sys¬ 
tem  of  the  South  has  been  changed,  and 
what  the  future  will  bring  forth  none  can 
tell.  The  Border  States  have  been  devas¬ 
tated,  and  the  general  position  of  affairs 
is  expressed  in  the  following  table : 

Real.  Personal.  Debt. 

North....  $9,647,937,031..  $1,955,820,248..  $3,000,000,000 
South....  1,634,922,608..  2,361,340,439..  2, 500, 000, 000  * 
Border . . .  723,896,951..  764,500,368..  devastate^. 

Total...  $12,006,756,585..  $5,081,661,050..  $5,500,000,000 


The  devastation  of  a  country,  as  long 
as  the  people  and  land  remain,  does  not 
produce  permanent  evil ;  because,  al¬ 
though  with  damaged  houses  and  stock,. 
.  the  production  will  be  resumed,  and  will; 
very  soon  equal  what  it  was  before.  The 
Border  States  are,  however,  already  put¬ 
ting  in  claims  for  damages,  and  these  will! 
perhaps  equal  the  tax  that  may  be  ex¬ 
tracted  from  them.  The  Southern  States 
may,  in  case  of  reunion,  not  be  able  to 
resume  their  productive  labor  by  reason 
of  the  policy  pursued  toward  them,  an 
annual  exportable  value  of  $300,000,000 
will  thus  be  paralyzed,  and  with  it  their 
ability  to  buy  the  former  quantities  of 
Northern  produce  and  manufactures. 
The  capital  that  did  exist  at  the  South 
has  been  consumed,  and  is  represented 
by  the  $2,500,000,000  of  Confederate 
paper  that  may  be  repudiated,  although  its 
issue  was  supposed  to  be  a  means  of 
binding  the  owners  to  the  fortunes  of  the 
Confederacy.  If,  however,  the  productive 
powers  of  the  South  are  destroyed,  these 
States  can  neither  pay  their  own  debta 


12 


nor  contribute  anything  to  the  Northern 
debts  either  by  taxation  or  by  the  re¬ 
sumption  of  trade.  A  result  of  the  wai 
thus  far  has  been  to  stimulate  into  activ¬ 
ity  industries  never  before  pursued  at 
the  South.  The  quantity  of  food  there 
produced  has  been  largely  increased,  and 
henceforth,  a  large  portion  of  the  sup¬ 
plies  that  formerly  were  drawu  from  the 
North  and  paid  for  in  the  Southern  sta¬ 
ples,  will  now  be  produced  on  the  spot, 
thus  permanently  destroying  the  West¬ 
ern  markets  for  those  commodities.  The 
North  will  no  longer  be  able  to  purchase 
with  the  products  of  its  labor  those  great 
Southern  staples  that  have  hitherto  con¬ 
stituted  so  large  a  proportion  of  our 
national  exports.  The  census  of  1860 
gave  the  Southern  productions  as  follows : 

Value. 

978,311,600  lbs.  .$101,834,616 
'  18,505,390 

8.612,539 
16,599,310 
3,883,376 
379,135,872 


185,023,906 
215,313,497  “  .. 
237,133,000  “  .. 
34,677  tons. 


Ootton . 

Tobacco, . 

Bice . 

Sugar . 

Hemp . 

Other  agriculture 

Number  of  slaves .  4,0 

Product,  per  head .  *L6A 

The  cost  of  slaves  per  annum  is  $75  aver¬ 
age  ;  consequently  they  earned  clear  $57 
per  head :  but  the  $75  was  expended  for 
Western  bacon  and  Northern  hats,  shoes, 
jeans,  and  Negro  cloths;  consequently 
the  North  had  a  large  profit  in  their 
work,  and  the  whole  production  was  a 
national  benefit.  The  project  of  the 
President  to  emancipate  and  deport  those 
producers  out  of  the  country  to  Central 
America  or  elsewhere,  at  an  expense  of 
$800,000,000,  would  thus  deprive  the 
country  of  an  annual  clear  product  of 
$228,000,000,  which  for  twenty  years 
will  be  $4,560,000,000.  The  interest  and 
linking  fund  of  the  cost  of  transportation 
for  the  same  period  would  be  $1,280,000- 
000,  or  thus : 

hZ  vlSsT.  Pr0dU.Cti°Q’.tW?"  $10,571,422,060 
Cost  of  deportation,  twenty  yrs.  1,280,000,000 


every  white  soul  in  the  country,  or  $1,700 
for  every  family.  If  the  Revocation  of 
the  Edict  of  Nantes,  by  which  some  of 
the  productive  population  of  France  was 
driven  out  of  that  country,  was  a  fruitful 
cause  of  the  ruin  of  fhe  monarchy,  what 
effect  would  such  a  blow  as  this  have 
upon  this  country?  This  is  the  project 
of  the  President,  however,  and  it  is  even 
less  expensive  than  to  allow  the  emanci¬ 
pated  blacks  to  remain  a  burden  upon 
the  whites  forever.  On  the  other  hand, 
were  the  Constitution,  with  its  guaran¬ 
tees,  restored  and  preserved,  the  produc¬ 
tions  of  the  South  would  quadruple  in 
the  next  twenty  years.  The  average 
aggregate  would  be  $22,000,000,000, 
according  to  the  rate  of  progression,  in 
the .  last  forty  years,  and  that  wealth 
would  be  diffused  throughout  every  por¬ 
tion  of  the  country,  while  the  black  race 
would  be  improved  and  prepared  for  a 
higher  state  of  material  welfare.  Thus 
the  difference  between  union,  peace,  and 
the  Constitution,  and  disunion,  war,  and 
anarchy,  is  immense  national  prosperity, 
including  that  of  the  black  race,  on  one 
hand;  and  national  ruin,  involving  the 
rebarbarizing  of  the  black  race,  on  the 
other. 

The  following  table  shows  the  males 
returned  of  military  age  in  each  State, 
and  the  number  sent  to  the  field  up  to 
the  close  of  1862  : 


Total  cost .  $11,851,422,060 

This  loss  is  to  be  borne  by  the  Northern 
people  alone,  since  with  the  removal  of 
the  blacks  there  would  be  no  Southern 
industry.  The  sum  is  equal  to  $360  for 


States. 
California. ... 
Connecticut.. 

Illinois . 

Indiana...... 

Iowa . 

Kansas . 

Maine . 

Massachus’tts 
Michigan  .... 
Minnesota . . . 
N.  Harapsh’e. 
New  Jersey.. 
New  York... 

Ohio . 

Oregon . 

Pennysylv’nla 
Rhode  Island. 
Vermont. ... 
Wisconsin  ... 


I860. 

42,854. 

89,942. 

222,772. 

253,589. 

50,443. 

148,372! 

242,046. 

104,232. 

1,847. 

77,980. 

116,726. 

772,244. 

502,058. 

4,069. 

571,867 

85,170. 

79,829. 

82,175 


I860. 

Males  15  a  SO. 

.  185,255.. 

.  110,929.. 

.  449,976.. 

846.784.. 

.  176,968.. 

.  29,446.. 

.  158,265.. 

.  296,122.. 

195.563.. 

46.965.. 

79.981.. 

.  161,866.. 

.  955,177.. 

.  585,860.. 

..  15,757.. 

..  718,973.. 

. .  41,151 . . 

79.207. . 

. .  203,398..  121,228. 


Increase. 

92,901. 

20,987. 

227,204. 

93,145. 

126,525. 

29,446. 

9,893. 

64,076. 

91,331. 

45,118. 

2,001. 

44,640. 


11,6S8. 

142,606. 

5,981. 


Troope 
Called  Out 

9,000 
28,551 
180,059 
9G,G98 
50,000 
14,000 
80,240 
.  72,107 

47,220 
19,957 
16,000 
27,400 
.  *219,059 
.  tl64,40S 
1,500 

.  1280,000 
10,000 
19,006 
42,557 


Total .  8,396,715..  4,781,993..  1,885,278..  1,227,756 

Now  it  will  be  observed  that  the  men 
called  out  up  to  the  close  of  1862  only, 


*  Including  15,838  three-months  men  In  the  summer  of 
1862. 

t  Including  16,659  in  summer  1862. 

X  Including  50,000  men  Jo  repel  inYasion  September, 

i&6 a. 


13 


nearly  equaled  the  whole  increase  of  the 
males  of  the  militia  age  i#  ten  years. 
The  estimates  of  losses  on  the  best  au¬ 
thorities  have  been  as  follows : 


Wounded,  115,091 ;  one  third  disabled. . 

Deaths  by  disease . 

Disabled  “  . 


27,981 

38,363 

170,000 

250,000 


Total  loss, 


458,363 


In  an  economical  point  of  view  the 
disabled  men  are  more  burdensome  than 
the  killed,  because  they  are  no  longer 


active  producers,  but  permanent  consum¬ 
ers  at  the  expense  of  others.  We  have- 
then  the  fact  that  one  third  of  the  whole 
ten  years  increase  of  males  of  the  mili¬ 
tary  age  have  been  swept  away. .  This- 
important  consideration  also  remains,  in* 
that  there  arrived  during  the  ten  years 
in  the  country,  and  settled  in  the  States 
enumerated,  *3,075,900  immigrants,  and 
these  supplied  800,000  men  of  the  miE- 
tary  age.  The  result  of  this,  influence  ifr 
seen  in  the  following  comparison: 

!60.  1800.  Increase.  P*  • 


Southern  States,  military  age. 
Northern  “  “  u  . 


920,883. .  1,189,079 

3,396,715 .  4,781,993 


268,196. 

1,385,278. 


28 

41' 


We  have  in  these  figures  the  effect  of 
immigration  in  increasing  the  military 
strength  of  the  North.  The  reverse  of 
the  picture  is,  however,  the  vast  numbers 
of  disabled  and  demoralized  young  men 
who  are  to  be  fhrown  as  burdens  upon 
an  overtaxed  population,  whose  means  of 
industrial  development  has  been  largely 
reduced. 

The  two  war  debts  compared  as  to  their 
amount ,  their  pressure,  and  their  effects  on 
the  productive  labor  of  the  iwo  countries. 

The  exact  amount  of  the  English  war 
debt  in  1860  was  $3,912,669,712;  and  the 
interest  in  that  year  was  $187,072,903. 
It  is  not  known  to  have  varied  since  that 
time. 

Since  the  foregoing  estimate^  of  the 
war  debt  of  the  United  States  was  made 
up,  it  has  become  probable  that,  war  ap¬ 
propriations  will  be  made  by  the  present 
Congress,  before  its  adjournment,  to  the 
extent  of  one  thousand  millions  of  dol¬ 
lars.  The  bills  already  passed  or  report¬ 
ed  cover  about  seven  hundred  millions, 
and  the  rest  is  on  the  road.  This  will 
raise  the  amount  of  the  whole  debt  to 
about  the  same  figures  as  the  war  debt 
of  England  :  about  $4,000,000,000. 

This  conclusion  was  reached  before  the 
publication  of  the  Letter  of  Mr.  Thurlow 
Weed,  in  which  he  comes  to  the  same 
figures,  and  to  the  conclusion  that  it  can¬ 
not  be  paid,  but  must  remain,  at  least 
three-fourths  ofi  it,  as  a  permanent  na¬ 
tional  debt. 

It  is  well  known  that  the  English  Gov¬ 
ernment  honestly  intended  to  pay  the 


war  debt,  and  a  law  for  that  purpose  was- 
passed  in  1819,  which,  if  it  had  been  en¬ 
forced  would,  by  this  time,  have  extin¬ 
guished  about  one-fourth  of  the  whole. 
But  the  yearly  cost  of  the  peace  establish¬ 
ment  had  been  so  enormously  increased; 
that  this,  added  to  the  interest  on  the 
war  debt,  was  all  that  the  nation  could  en¬ 
dure  without  endangeringrevolution  and; 
repudiation.  Even  this  pressure  sends 
one-eighth  of  the  people  to  the  poor  house. 
And  if  England  had  not  the  Colonies  as 
well  as  the  poor  house,  she  would  want 
more  soldiers  at  hand  to  prevent  revolu¬ 
tion. 

England  is  the  richest  nation  on  earth,, 
and  more  able  than  any  other  to  pay  the 
principal  of  a  war  debt.  Wealth,  avail¬ 
able  for  the  payment  of  such  debt  must 
be  measured  by  money  incomes,  and  by 
resources,  which  labor  may  convert  into 
money  after  paying  the  laborers  and  the 
interest  of  the  capital  employed.  Among 
these  resources  coal  is  king  and  iron  is 
queen,  and  incomes,  in  gold  and  silver, 
are  their  beautiful  children. 

The  coal  raised  from  the  English  mines 
last  year  was  eighty  millions  of  tons. 
The  iron  made  and  sent  out  of  England 
was  about  four  millions  of  tons. 

Taking  these  as  rough  measures  of 
ability  to  pay,  and  comparing  them  with 
the  ability  of  the  United  States  to  pay  a 
war  debt,  we  find  their  power  to  be 
about  seven  times  as  great  as  our  own. 
We  raised  about  eleven  millions  of  tons 
of  coal  in  the  last  year — about  one-sev¬ 
enth  of  the  quantity  raised  by  England 


14 


7 


The  iron  products  were  not  very  far  from 
the  same  proportion.  But,  it  may  be 
thought  that,  the  taxable  incomes  would 
be  a  more  just  measure  of  comparative 
ability  to  pay.  Now,  if  incomes  may  be 
measured  by  the  amount  they  yield  in 
taxes,  we  are  able  to  give  the  exact  fig¬ 
ures.  The  revenue  derived  from  our  in¬ 
come  tax  last  year  was  $J  1,241,101,  while 
that  of  England  amounted  to  $53,240,000. 

Here  we  find  that  the  proportion  does 
not  differ  essentially  from  the  proportion 
of  their  coal  to  ours.  Should  it  be  said 
that  our  incomes  have  not  yet  learned  to 
pay  taxes,  it  may  be  replied  that,  under 
present  arrangements,  our  incomes  are 
likely  to  pay  less  rather  than  more  in  the 
future.  Those  who  have  seen  the  figures, 
and  made  the  estimates,  declare  that 
England  t&xes  five  times  as  much 
wealth  as  the  United  States,  and  the 
*  income  tax  confirms  it.  The  indica¬ 
tions  from  coal,  iron  and  incomes  look 
in  that  direction.  But,  however  that  may 
be,  it  will  not  be  questioned  that  the  abil¬ 
ity  of  England  to  pay  her  war  debt  is 
much  (if  not  many  times),  greater  than 
ours.  She  cannot  pay  hers  ;  can  we  pay 
ours  ?  This  is  the  question. 

When  the  English  statesmen  found  that 
j  the  principal  of  their  war  debt  could  not 
I  be  paid,  they  next  inquired  how  they  could 
provide  for  prompt  payment  of  the  in¬ 
terest. 

1.  They  did  all  in  their  power  to  re¬ 
duce  the  interest  to  the  lowest  possible 
rate.  Some  part  of  the  debt  was  con¬ 
tracted  at  high  rates  of  interest.  But, 
by  good  management,  through  a  series  of 
years;  they  brought  it  down  to  three  and 
one  h  alf  per  cent.,  which  is  the  present 
rate.  With  a  long  peace,  great  commer¬ 
cial  prosperity,  and  a  vast  increase  of 
the  gold  production,  they  may  be  able  to 
reduce  the  rate  still  lower.  But,  mean¬ 
while,  the  interest  was  accruing. 

2.  The  English  statesmen  employed 
their  ingenuity  in  divising  a  system  of 
taxes  which  could  be  endured  and  yet  be 
sufficient.  The  stern  resolve  to  pay 
promptly  inspired  the  people  to  endure 
bravely.  The  return  of  peace  made  person¬ 
al  abstinence  hopeful  and  welcome.  But 
the  experiment  was  new  ;  for,  while  war 
raged,  they  had  continued  to  borrow,  and 
defer  the  public  burden :  now  they 
saw  that  borrowing  must  cease  when 


thp  hope  of  payment  was  gone  ;  but, 
they  knew  not,  even  then,  on  whom 
the  pressure  of  the  tax  for  interest  must 
ultimately  fall.  The  simple  doctrines, 
since  developed  by  J.  S.  Mill,  were  vague¬ 
ly  perceived.  They  thought  that  taxing 
beer  at  the  brewery  and  tobacco  at  the 
warehouse  laid  the  burden  on  the  brewer 
and  the  merchant,  but  Mill  has  taught 
them  that  the  laborer  must  ultimately 
feel  the  whole  pressure  on  his  pipe  and 
cup,  because  the  beer?  and  the  tobacco 
would  cease  to  be  produced, unless  the  cap¬ 
italist  was  first  paid  his  interest  and  pro¬ 
fit,  and  the  manufacturer  his  share,  while 
every  tax  must  be  added  to  the  commod¬ 
ity  and  collected  from  the  consumer, 
taking  from  wages  every  such  addition  ; 
otherwise  the  capital  would  go  to  other 
occupations  or  other  countries. 

Then  it  was  obvious  that,  the  day  la¬ 
borer  needed  as  much  beer  and  tobacco 
as  the  merchant  or  the  landlord  ;  but, 
while  the  latter  could  bear  this  burden 
without  stinting  his  bread  or  his  shoes, 
the  day  laborer  could  not.  So  the  day 
laborer,  pinched,  experimentally,  at  all 
points  until  sickness  completed  his  dis¬ 
couragement,  and  he  sought  refuge  in 
the  poor  house  or  got  a  free  ticket  of 
leave  to  the  Colonies.  The  poor  house 
and  the  Colonies  were  not  taxed. 

To  mitigate  the  pressure  on  the 
class  of  labor,  the  corn-laws  were  repeal 
ed,  so  that  laborers  might  have  a  chance 
for  cheaper  food.  Then  the  income  tai 
was  imposed  to  give  some  relief  to  labor 
But,  “once  a  pauper  always  a  pauper.” 
The  poor  house  flourished.  .  Reliefs  have 
been  and  still  are  tried,  but  yet  the  pan 
per  class  outgrows  all  others.  It  in 
eludes  one-eighth  of  the  whole  people. 

The  laborer  is  not  taxed  on  his  wages 
but  he  is  taxed  on  everything  bought 
with  his  wages;  and,  on  most  articles,  he 
pays  the  same  tax  as  the  landlord  or  the. 
merchant. 

Look  at  it  in  another  light,  and  the  re 
suit  is  even  worse.  All  the  wealth  pro¬ 
duced  in  the  year  to  pay  this  interest  is 
produced  by  manual  labor,  which  is  ap¬ 
plied,  in  wages,  to  the  machinery,  raw 
material  and  provisions  previously  laid 
up  by  the  capitalist.  Capital  can  float  to 
any  country  where  it  will  give  the  best 
return  to  the  owner.  The  average  profit 
of  caoital  in  the  whole  world  must  be 


15 


lKamed  in  England  or  the  capital  will  mi¬ 
grate  ;  not  so,  the  laborer ;  he  is  bound 
*  toy  hubit,  family  and  language  ;  and 
larger  his  class  the  smaller  his  pay.  lhe 
whole  product  of  labor  applied  to  capital 
goes  first  to  remunerate  the  capitalist  ; 
after  him  comes  the  tax  gatherer,  for  his 
share  is  taken  out  of  what  would  other¬ 
wise  go  to  the  laborers,  and  what  remains 
is  wages.  The  capitalist  may  advance  the 
tax,  but  to  be  returned  to  him  by  the 
merchant,  who  collects  it,  in  the  advance 
price  of  the  commodity  from  the  consum¬ 
er,  and  the  laborers  being  nine  tenths  ot 
the  whole  people  pay  the  great  body  ot 
the  tax.  In  England  there  is  one  relief 
for  labor  ;  what  is  collected  as  tax  from 
the  incomes  of  the  rich  is  so  much 
saved  to  the  tax  on  labor.  But,  with 
this  exception  labor  must  produce  the 
interest  on  the  war  debt.  Under  this 
-course  of  things  capitalists  grow  richer. 
England  is  the  richest  country  on  earth 
because  she  has  the  coal  and  iron  and 
machinery  on  the  easiest  terms  ;  but  this 
-does  not  diminish  her  paupers.  Nor  can 
any  power  on  earth  change  this  case  un¬ 
less  by  lowering  the  rate  of  interest  or 
raising  the  income  tax. 

When  the  permanent  funding  of  the 
public  debt  was  adopted  as  the  future 
plan  qf  the  exchequer,*  the  owners  of 
these  bonds  were  pleased .  Capitalists 
were  ready  to  buy  them  instead  of  en¬ 
gaging  in  commerce  or  manufactures  ; 
and  it  was  common  to  speak  of  them  as 
a  part  of  the  capital  of  the  kingdom. 
The  labor,  which  was  at  work  in  the 
fields,  the  mines  and  the  factories  knew 
nothing  and  thought  nothing  of  what 
was  being  done  in  its  behalf.  But  men 
began  at  length  to  examine  the  nature  of 
this  capital,  represented  by  4,000,000,000 
of  dollars  of  bonds.  They  found  that  the 
bonds  not  only  did  not  answer  to  any  of 
the  descriptions  of  capital  given  by  eco¬ 
nomists,  but  that  they  were  to  the  pro¬ 
ductive  capital  of  England  a  minus  quan¬ 
tity  ;  they  represented  so  much  capital 
which  had  been  carried  to  America,  In¬ 
dia,  France,  and  Spain,  and  had  been  en- 
^  tirely  consumed  in  war,  no  part  of  it  ap~ 
pearing  in  any  new  form  of  wealth  in 
England  ;  but  it  did  re-appcar  in  the 
,  ghostly  form  of  so  much  poverty ,  which 
could  be  appeased  only  by  taking  140 
millions  of  dollars  fro  m  the  labor  and  in¬ 


comes  of  the  people  every  year  to  lay 
this  ghost,  before  the  laborers  could 
feed  or  clothe  their  families.  It  raised 
the  laborer  to  early  tasks,  pricked  him 
on  when  his  strength  failed,  and  haunted 
his  dreams  when  he  slept. 

But,  heavy  as  this  poverty  was  it  was 
not  attended  by  the  common  miseries  of 
war — there  had  been  no  destruction  of 
private  property  in  England.  England 
endured,  with  great  composure,  the :  de¬ 
struction  her  soldiers  and  subsidies 
carried  to  homes  in  other  lands.  And 
her  laborers  had  not  new  homes  to  pre¬ 
pare  for  themselves  before  applying  then- 
shoulders  to  the  yearly  burden  of  an  eter¬ 
nal  debt.  ,  _  _  .  ,  . 

The  products  of  English  labor  taken  to 
pay  this  interest  pass  through  numberless 
changes  to  reach  the  consumer  ;  evepr 
improver  and  conveyer  of  a  commodity 
has  added  a  value  ;  and,  at  every  change 
the  merchant  has  advanced  the  tax,  and 
taken  it  out  of  the  laborer's  share,  so  that 
the  commodity  may  be  kept  low,  and 
compete  in  the  market  of  the  world  with 
like  commodities  produeed  in  countries 
not  so  taxed. 

3.  If  we  turn  now  to  the  prospect  be¬ 
fore  American  labor,  we  have  only  to  ap¬ 
ply  the  experience  of  English  labor  tor 
the  last  forty  years.  If  the  interest  on 
our  debt  were  three  and  a  half  per  cent., 
and  if  incomes  in  our  country  could  and 
would  pay  as  largely  as  the  incomes  ot 
Englishmen,  yet  there  would  be  against 
our  labor  the  comparative  advantage  the 
English  enjoy  in  the  maturity  of  their 
manufactures  and  commerce,  and  the  ease 
with  which  they  obtain  coal  and  iron  to 
send  their  products  over  the  world.  .But, 
unfortunately,  our  debt  has  been  con¬ 
tracted  at  five  and  six  per  cent  ;  and,  by 
a  strange  oversight,  our  bondholders  are 
excused  from  the  payment  of  taxes.  Any 
attempt  to  reduce  the  rate  of  interest,  or 
to  tax  these  bonds,  will  be  resisted  by  ar¬ 
guments  and  influence,  which  nothing  but 
the  fear  of  repudiation  would  subdue. 
And  to  oppose  these  arguments  would  be 
an  attempt  at  repudiation.  But,  mean¬ 
while,  it  is  obvious  that,  with  the  nearest 
and  earliest  possible  close  of  the  war,  the 
labor  of  this  country  must  hereafter  carry 
a  yearly  load  more  than  twice  as  lieavj 
as  that  which  the  labor  of  England  has 
carried  during  the  last  forty  years. 


16 


Questions  more  profound,  more  obvious¬ 
ly  affecting  men’s  daily  bread,  and  far 
less  hopeful  of  solution  than  ever  agita¬ 
ted  the  North  and  the  South,  are  sure  to 
spring  up  on  this  subject.  Every  day 
men  will  look  with  more  anxious  interest 
for  the  appearance  of  a  statesmanship 
which  will  compose  our  affairs  and  quiet 
the  apprehensions  about  prolonged  and 
ineffectual  war.  Thoughtful  men  are 
weighing  the  value  of  a  constitutional 
•  government,  which  gives  a  worse  promise 
for  labor  than  the  constitutional  mon¬ 
archy  of  England  now  gives  to  English 
labor.  Nor  can  the  true  state  of  this 
case,  the  actual  and  future  condition  of 
our  public  finances,  be  much  longer  kept 
out  of  the  winter  evening  talk  of  our 
farmers,  mechanics,  and  trades-people 
who  meet  around  their  home  fires  and  in¬ 
quire  what  the  future  of  the  country  pro¬ 
mises  for  them  and  their  children.  They 
will  see  the  condition  of  English  labor 
consequent  on  the  payment  of  their  inter¬ 
est,  they  will  observe  that  the  pressure 
on  labor  here  will  be  twice  as  great  as 
there  ;  they  will  inquire  what  relief  our 
labor  may  expect  from  the  income  tax  ; 
and  when  they  are  told  that  English  labor 
was  relieved,  last  year,  by  an  income  tax 
of  fifty-three  millions,  while  the  Ameri¬ 
can  income  tax,  last  year,  was  only 
eleven  millions,  they  will  look  despair¬ 
ingly  on  the  prospect  before  them  and 
their  children. 

c  on  c  lusion. 

The  financial  scheme  of  the  English 
party  which  prosecuted  the  war  against 
America  and  France  rested  largely  on 
the  fallacy  of  the  sinking  fund.  Mr.  Pitt 
did  not  clearly  foresee  what  a  load  he 
was  preparing  for  English  labor  to  carry 


through  all  time.  But  English  labor  had 
groaned  forty  years  under  the  burden 
and  the  groans  had  reached  our  shores! 
by  every  emigrant  .ship  before  1860. 
The  English  poorhouse  wa$  well  under¬ 
stood  here  before  Dickens  laid  bare  its 
enormities — before  Oliver  Twist  was 
horn.  .  i 

Oqr  rulers  knew  what  they  were  doing/ 
and  why,  when  they  neglected  to  levy 
and  collect  the  amount  of  the  war  burden] 
in  each  year  of  the  war  ;  but,  instead  of 
taxing,  went  on  to  run  up  a  war  debt,, 
which  they  well  knew  could  never  be 
paid  ;  and,  which  they  knew  as  well  then 
as  now,  must  drain  its  interest,  forever, 
from  the  yearly  earnings  of  productive 
labor,  except  so  far  as  income  tax  might  j 
relieve  it.  And  what  relief  will  eleven] 
millions  of  income  tax  give  to  a  yearly 
tax  of  hundreds  of  millions  to  be  earned 
in  each  year,  to  stop  the  gap  made  in  the 
commonwealth  by  borrowing  for  war  pur¬ 
poses  four  thousand  millions  of  dollars  ? 

The  best  apology  for  our  rulers  is  found 
in  the  example  of  the  rulers  of  Europe  on 
the  same  subject.  In  nearly  all  the  Eu¬ 
ropean  countries  the  rulers  have  run  up 
a  war  debt,  of  which  only  the  interest 
can  be  paid  ;  a  debt  which  they  dare  not 
increase,  for  fear  of  resistance  from#the 
tax  payers — a  debt  the  interest  on  which 
is  only  to  be  collected  by  a  strong  govern¬ 
ment.  The  peace  of  Europe  is  insured,, 
mainly,  by  the  danger  of  revolution, 
which  would  be  incurred  by  increasing 
the  war  debt.  Is  such  to  be  our  govern¬ 
ment  and  such  our  security  for  future  j 
peace  ?  Are  such  fortunes  reserved  for 
the  children  of  the  people  who  filled  the  j 
world  with  the  fame  of  their  constitu¬ 
tional  liberty,  and  their  consequent  pros¬ 
perity  ? 


